The U.S. Senate voted 70-27 on March 4, 2025, to repeal a Biden-era IRS rule targeting decentralised finance (DeFi) platforms. Using the Congressional Review Act, lawmakers moved to erase the 2024 rule requiring DeFi protocols to report user transactions.
Senator Ted Cruz (R-TX), the resolution’s sponsor, labelled the policy “incoherent federal overreach” before the vote. Meanwhile, bipartisan support underscored growing legislative momentum to reshape crypto oversight.
Bipartisan Backing Marks Shift in Crypto Policy
Despite Democratic divisions, 20 senators from the party joined Republicans to pass the resolution. Younger Democrats notably backed the effort, signalling generational alignment on tech innovation.
This mirrors 2023’s repeal of a Securities and Exchange Commission crypto accounting rule. The vote highlights strengthening bipartisan cooperation on digital asset policies. “DeFi is a microcosm of the crypto revolution,” Cruz declared, arguing the rule wrongly treated software developers as financial brokers.
House Vote Looms as White House Signals Support
The resolution now heads to the House, where a matching proposal cleared committee in February. President Donald Trump is expected to sign it swiftly if approved, according to crypto advisor David Sacks. Furthermore, the White House has hinted at urgency, calling the rule “unworkable.” However, the House must act before mid-April to meet Congressional Review Act deadlines. Industry advocates urge quick passage to finalise the repeal.
Industry Leaders Hail Victory
“This is a big day for DeFi and the U.S. crypto industry,” said Kristin Smith, CEO of the Blockchain Association. Eli Cohen of Centrifuge praised the repeal, noting the rule’s impracticality for decentralised platforms. Additionally, the DeFi Education Fund hailed the Senate’s move as a “historic milestone.”
Advocates argue scrapping the rule preserves U.S. leadership in blockchain innovation. “DeFi is an American strategic strength,” Smith emphasised, linking the decision to broader economic competitiveness.
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Legal and Practical Challenges of the IRS Rule
Critics long argued the IRS rule, finalised in December 2024, ignored DeFi’s decentralised structure. Platforms lack centralised control to collect user data or track transactions, making compliance impossible.
Moreover, the rule would have classified protocol developers as “brokers,” demanding taxpayer details. “Their software never holds user funds,” Cruz stressed. Taxpayers must now self-report crypto gains, maintaining existing IRS obligations without intermediary mandates.
What’s Next for Crypto Regulation in the US?
The repeal bars the IRS from reintroducing similar rules, cementing a regulatory reset. Attention now turns to pending stablecoin and market-structure bills aiming to formalise federal oversight.
Advocates hope bipartisan momentum accelerates these efforts. “This Congress is the most pro-crypto yet,” Smith noted, linking the Senate vote to future legislative wins. Meanwhile, the House’s upcoming decision could set a precedent for balancing innovation with accountability.
Final Steps and Long-Term Implications
If the House approves the resolution, Trump’s signature would immediately nullify the IRS rule. This hands DeFi developers a regulatory reprieve while challenging lawmakers to craft clearer guidelines.
One thing to note is that the Treasury may explore alternative approaches to crypto taxation. For now, the Senate’s decisive action reflects a growing recognition of blockchain’s economic potential and a rejection of policies deemed incompatible with its decentralised ethos.
Written By Fazal Ul Vahab C H
